Efforts by school leaders in Stillwater and Mahtomedi to balance their district’s finances show that voter-approved tax levies go only so far.

Last week, the Stillwater school board began closing a $2.5 million budget shortfall by using cash reserves, shifting funds and instituting cuts. The reductions come even after voters overwhelmingly approved a $16.2 million levy in November that included $5.2 million in new funding.

“All through the levy campaign we said this was not going to fix our problem,” said Superintendent Corey Lunn, who noted that a recent change in how the state calculates per-pupil funding hit the district hard.

Among the cuts is $1 million in educator staffing that will increase elementary- and secondary-class sizes by one student per class. More spending reductions are expected when the board meets next week.

Neighboring Mahtomedi also is cutting its spending plan, but its $1 million projected shortfall comes after voters defeated a request in November to increase an existing operating levy by $1.2 million for a total of $3.3 million annually.

“If the levy had passed, we would not be cutting,” said Superintendent Mark Larson. “It failed, and that means we keep the same level of funding, and that’s not enough to keep the programming we have.”

The board has approved about $368,000 in program cuts so far and plans to use reserves and new revenues from open enrollment to close the rest of the gap. District leaders anticipate going back to voters in the fall with another levy request, but the amount has not been determined.

Although each district has unique financial challenges, there are some similarities driving their need to reduce spending.

Leaders in Stillwater and Mahtomedi said state funding has not kept up with increasing costs and inflation in the past decade. The $485 million in new school funding approved by the Legislature last year included an increase of about 1.5 percent a year.

Both districts have cut some programs and leaned on cash reserves to keep others.

But cash reserves don’t last forever. Stillwater, for example, has decreased its fund balance to about $4 million from $16 million in the past five years.

Lunn said Stillwater has reacted to declining enrollment by tapping reserves. Now, with much of that savings account gone, the board will have to make tough decisions.

“There are a lot of things that could be done to address it,” Lunn said. “If we get out ahead of it, we control our own destiny. But people have to be ready to change.”

Andy Kubiak and Tracy Maki, parents who worked to pass Stillwater’s recent levy, said they understood the new money wasn’t going to solve all the problems. They are confident the district’s new “Bridge to Excellence” master plan that focuses on personalized instruction will eventually help reduce costs and draw new students.

“With that plan, we’ve turned the battleship around,” said Kubiak, who has two children in Stillwater schools. “Change is hard. We have to do things outside our comfort zone, to be bold and create a school system that is marketable.”

Attracting new students and the revenue that comes with them can be tricky. Mahtomedi long has worked to balance the extra funding that open enrollment provides with the community’s desire for a certain-size school district, Larson said.

“Mahtomedi has a number of families who want to be here,” said Larson. “We don’t accept all open enrollment students. We don’t have room for them …. We are turning away a big chunk.”

In the coming months, leaders in both districts will continue to make tough choices.

After Stillwater board members figure out how to close next year’s budget gap, more cuts are likely in coming years. Mahtomedi’s board will decide how much to request from voters in the fall when the existing levy expires.

“Board members are wrestling with two options,” Larson said of whether they should ask for an increase or a straight renewal. “It’s going to have to be very matter of fact: ‘If this fails, we are going to eliminate this or that.’ Stillwater is a year ahead of us on this.”

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